The Economic Crime and Corporate Transparency Act 2023 received Royal Assent on 26 October. The Act covers companies house reform, limited partnership reform, money-laundering, powers to seize and recover suspected criminal cryptoassets, spurious lawsuits, and corporate criminal liability. Different parts of the Act will come into force at different times over the coming months as appointed by the Secretary of State or the Lord Chancellor.
Companies House reform
The Act runs to 377 pages in total and is aimed at overhauling the role of Companies House and improving transparency over UK companies. The key changes include:
- all existing and new company directors and persons with significant control will be required to verify their identity with Companies House;
- Companies House will have new powers: (a) to check, remove or decline information on the register; (b) to investigate and enforce breaches powers; (c) to cross-check data with other public and private sector bodies; and (d) to share information with law enforcement bodies; and
- Broader reforms to clamp down on misuse of corporate entities.
Limited partnership reform
The Act addresses the misuse of limited partnerships in the following key ways:
- Tightened registration requirements;
- Limited partnerships required to have a connection to the UK;
- Increased transparency requirements; and
- Powers for the Registrar to deregister limited partnerships.
The Act provides additional powers to law enforcement to seize and recover cryptoassets which are the proceeds of crime or associated with activity such as money laundering, fraud and ransomware attacks. The Act amends criminal confiscation powers in Parts 2, 3 and 4 of the Proceeds of Crime Act 2002 (POCA) and civil recovery powers in Part 5 of POCA to enable enforcement agencies to tackle criminal use of cryptoassets more effectively.
Strengthening anti-money laundering powers
The Act strengthens anti-money laundering powers, improving information sharing on suspected money laundering, fraud and other economic crimes. Businesses will be able to share information more easily for the purposes of preventing, investigating or detecting economic crime by disapplying civil liability for breaches of confidentiality for firms who share information to combat economic crime.
The Act includes provisions to tackle Strategic Lawsuits Against Public Participation (SLAPPs) which feature economic crimes, intended to provide defendants with more protection against SLAPPs. The changes include an early dismissal mechanism and a new cost protection regime for defendants, as well as defining a SLAPP in legislation for the first time.
Corporate Criminal Liability
The Act includes a new offence of failure to prevent fraud. This is designed to address companies profiting from fraud committed by their employees. An organisation will be liable where a fraud offence is committed by an employee or agent, for the organisation’s benefit, and the organisation did not have reasonable fraud prevention procedures in place. An update to a legal principle known as the ‘identification doctrine’ will also ensure businesses can be held criminally liable for the actions of their senior managers who commit an economic crime.